In a traditional model, individuals request funds, such as payday loan funds, by visiting a payday lending store. A payday loan fund is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. A lender provides the short-term unsecured loan to be repaid at the borrower's next pay day. Typically, the borrower writes a postdated check to the lender in the full amount of the loan plus fees. On the maturity date, the borrower is expected to return to the store to repay the loan in person. If the borrower does not repay the loan in person, the lender may redeem the check.
Currently, it may take several days for the requested loan funds to be transferred to the borrower's financial account such as a checking or savings account. For example, a loan check deposit or an automated clearinghouse (“ACH”) transfer may take too long. This is undesirable because typically a borrower requesting the loan funds is usually in need for these funds fairly quickly. Furthermore, the borrower and his/her account need to be properly identified and authenticated to ensure that the funds are securely transferred. Other problems such as walking out of the payday lender store with cash may be undesirable.
Conventional systems suffer from these and other problems.